Alan Futerfas, a Manhattan attorney representing Trump in the matter, said the lawsuit was politically motivated, and that former state Attorney General Eric Schneiderman should have recused himself from any probe into Trump or his foundation.

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Alan Futerfas.

Attorneys for President Donald Trump said in a new filing late Thursday that the state’s lawsuit against his charitable organization should be dismissed, in part, because former Attorney General Eric Schneiderman had a clear political bias against the president.

Alan Futerfas, a Manhattan attorney representing Trump in the matter, said the lawsuit was politically motivated, and that Schneiderman should have recused himself from any probe into Trump or his foundation. The litigation was born from an investigation manifested by Schneiderman, a Clinton supporter, in 2016.

The argument was part of a motion to dismiss current state Attorney General Barbara Underwood’s claims against the Trump Foundation. Her office is suing the Trump Foundation, Trump, and three of his children for allegedly using the foundation in coordination with Trump’s 2016 presidential campaign and to resolve a handful of personal financial obligations.

The lawsuit, announced in June, is the result of an almost two-year investigation from the attorney general’s office started under Schneiderman. Futerfas criticized Schneiderman for leading the investigation when he openly opposed Trump’s campaign for president.

“The appearance of bias and impropriety on the part of this governmental agency, charged with impartial decision-making, is simply overwhelming,” Futerfas wrote. “The NYAG should have recused itself long ago. It did not and, instead, brought an action it never otherwise would have but for its long-standing very public and very political, antipathy towards [Trump].”

Futerfas also claimed that Schneiderman, while he was still in office, solicited campaign donations from his efforts to oppose the Trump administration. He said in his memorandum of law accompanying the brief that because of his support for Clinton and opposition to Trump, he was “inappropriately conflicted.”

The situation is similar to that of the court of appeals decision in People v. Adams, Futerfas said. In that case, the court of appeals said a prosecutor was put into a position where they may have acted differently because the complainant in a case was a sitting judge. Futerfas said the same could be said about Schneiderman and Trump.

“Just as in Adams, there is an objective basis to question whether the NYAG exercised its discretion in an evenhanded manner where it appears that animus tainted the NYAG’s treatment of this case from the start,” Futerfas wrote.

Evidence of Schneiderman’s bias was found in his choice not to investigate the Clinton Foundation, Futerfas wrote. He said that while Schneiderman was investigating the Trump Foundation, his office “was turning a blind eye to serious and significant public allegations of misconduct involving the Clinton Foundation.”

He used news reports to back up the argument. One was an article from The New York Times in 2015 reporting that the Clinton Foundation did not initially disclose on its tax returns $2.35 million in donations from a Canadian uranium mining business.

Another article, from Scripps, claimed that the Clinton Health Access Initiative, once part of the Clinton Foundation, did not disclose to the state $225 million in foreign government grants that it had disclosed to the IRS. Neither state nor federal litigators alleged any wrongdoing by the organization on either occasion.

When Schneiderman was asked by reporters in 2016 why he did not investigate the Clinton Foundation, he said the organization’s errors amounted to “ministerial, routine stuff” and that it was “properly registered and properly filed.”

While the Clinton Foundation was not the subject of litigation from the attorney general’s office in recent years, many other charitable organizations have found themselves under such scrutiny.

Just last year, Schneiderman’s office shut down an organization that claimed to be providing services to breast cancer patients but, in reality, was pocketing almost all of the money collected. On another occasion, the office was able to close an organization that used the money collected through direct mail campaigns to pay for fundraisers. The money that actually made it to the foundation was mismanaged.

In the claims against the Trump foundation, Underwood is seeking $2.8 million in restitution after the foundation allegedly colluded with the president’s 2016 campaign on a fundraiser in Iowa for veterans organizations just days before the Iowa caucuses. She also wants to ban Trump from leading a nonprofit in New York for a decade.

Futerfas said in his brief that the Trump Foundation was used for the fundraiser because it was able to both collect and distribute the money to the designated charities. He also said the foundation did not spend any money on the fundraiser and that all of the money collected through the event was given to charity.

“The foundation was selected as the pass-through for the website donations because the donations were destined for 501(c)(3) charitable organizations and the foundation is a 501(c)(3) charitable organization with grant-making authority,” Futerfas wrote.

He claimed the foundation’s involvement in the fundraiser was not illegal because there was no financial interest for Trump or the foundation. The attorney general’s office has claimed that the political benefits of the fundraiser would satisfy that requirement, Futerfas said, but he disagreed.

“Intangible, indirect collateral benefits derived from the disbursements by the foundation to 30 veterans charities do not constitute a ‘financial interest’ in those donations within the meaning of the statute,” Futerfas wrote.

Underwood also claimed the foundation was used to settle a handful of personal financial obligations for Trump. Futerfas had an excuse for each of those situations in his brief and said in each occasion that the money was reimbursed to the foundation.

One of those situations, Futerfas said, was just a mix-up. Trump supported Florida Attorney General Pam Bondi in her 2013 election. He asked a clerk at the Trump Organization to donate $25,000 to her campaign. The clerk though her campaign fund, called “And Justice for All,” was a charity. She found one of the same name in Utah and cut a check from the Trump Foundation. Another clerk sent the check to Bondi’s re-election campaign. Trump eventually reimbursed the foundation.

Underwood’s office does not agree that the dealings were either accidental or legal. A spokeswoman for Underwood said between the Iowa fundraiser and the foundation’s involvement in other self-dealing transactions, the foundation functioned as little more than a “personal piggy bank.”

“As our lawsuit detailed, the Trump Foundation functioned as a personal piggy bank to serve Trump’s business and political interests,” said Amy Spitalnick, spokesperson for Underwood. “We won’t back down from holding President Trump and his associates accountable for their flagrant violations of New York law.”

Futerfas also revived a frequent argument from Trump’s attorneys in his brief. He claimed that the supremacy clause of the U.S. Constitution prohibits a sitting president from being sued in state court.

Trump’s attorneys have used the same argument against a defamation lawsuit from former “Apprentice” contestant Summer Zervos. They believe the 1997 decision in Clinton v. Jones exempts Trump from state action, though legal experts have disagreed with that argument.

The next appearance in the lawsuit is Oct. 11 before Manhattan Supreme Court Justice Saliann Scarpulla.

Dan M. Clark

Dan M. Clark is the Albany reporter for the New York Law Journal. He covers the state Court of Appeals, the state legislature, state regulators, and more. Email Dan anytime at dmclark@alm.com.

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